St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1887-12-31

from OverchargeS the government has
suffered through the erroneous reports
made by the aided companies to the
| government, and the total loss from over
| charges and erroneous reports is eSti-
mated at over sS,000,000.
PROFITS OF S27S, 023, 357.64.
In computing the operations of the
various roads the commissioner gives a
table showing profits or net earnings of
| s27S, 024, 357.63. The aided companies
have paid out over S25, COO, 900 for pools,
rebates and refunds of various sorts, and
they have deducted these sums from the
gross earnings actually made by them
before stating the amount which was
reported to the government as their
gross earnings.
S142, 100000 DIVIDED BY FOUR MEN.
The commissioner finds that large
sums were applied by each of cOmpa-
MES to improper uses; that the four men
who controlled the Central Pacific,
MessrS. Stanford, Huntington, Hopkins
and Croker, had diverted the earnings
of that company through contracts made
by themselves with themselves, for
construction, leases and repairs, and di-
vided over S142,000,000 in cash and Sc
curities; that they built LII miles Of
adjunct lines, and as directors of the
Central Pacific Railroad company took
leases of their own lines from them
selves for the Central Pacific at the rate
of nearly Ii per cent per annum; that
fifteen months ago, three of these di-
rectOrS contracted with themselves to
build an extension of the California and
Oregon division of the Central Pacific,
distance of 103 miles, the actual cost
of which work was So, sos, 600, while they
paid to themselves SS,000,000 i'll stock
and S4,500,000 in bOnds-the market
value of the stock and bonds at that
time having been SS,340, 00O-so that
they personally profted by their own
votes by that single transaction to the
extent of 81, S34, sol. AS directors of The
Central Pacific they also loaned the
funds of that company to themselves to
build the Southern Pacific, competing
line across the continent.
ACCOUNTS OF THE UNION PACIFIC.
In the accounts of the Union Pacific
it was found that S3S, 100000 of the funds
of that company had been expended for
the construction of branch lines; that
many millions additional had been
SQuandered in the purchases of bank
rupt branch lines at excessive prices,
and that the earnings of the express and
telegraph services of that company, as
we'll as of the other bOnd-aided compa-
MES, were. in violation of the law,placed
under the control of express and tele-
graph companies in which some of the
managers of the Union Pacific and Cen
trail Pacific Railroad companies were
largely interested, and of which they
were the main beneficiarieS. The book
accounts of the Union Pacific prior to
1880 are frequently unsupported by
vouchers, and for some years there are
practically no vouchers to establish the
correctness of the books. Since 1880
there have been expenditures in con-
nectiOn with legislation in Western
states which were not properly vOuched
for. The accountants of the comm sSiOn
report that no vouchers exist to show
the disbursements by the Central
branch. and that all the vouchers of the
Sioux City q Pacific from 1864 to 1880
are missing, with the exception of few
cash vouchers.
MANAGEMENT CONTEMPLATED BY
CONGRESS.
Had the Pacific railroads been built
and managed upon honest methods, had
the government loan been properly APP
piled, these companies, regarded as a
whole, could have declared dividends at
the rate of 6 per cent per annum for
eighteen years. from the date of actual
completion to the present time, upon all
the moneys that would have been re-
quired to pay in to complete and equip
the roads; they would have owned
2,495 miles of road free from all debt,
and worth $124,6Q0,0O0, upon an
original outlay of less than s35,-
Union Pacific, Central Pacific and Cen
trail Branch, could have repaid every
cent of the principal and interest adj
vanced by the government to date, and
could have reduced their charges to
shippers to the extent of over $4,000
600, or nearly SS,000,000 per year. For
81 the stockholders would have realized
S1.07 in dividends in eighteen years and
Sill in land sales. The property would
have been free from debt. and for every
dollar that they had invested the stock
holders would have had in property over
81, so that in eighteen years each dollar
would have yielded S6.1S.
METHODS ACTUALLY PURSUED.
But they chose dishonest methods.
At the outset they divided S172, 346. lis
of fictitious capital; they diSsipated over
SlO7, 100000 which should have been ap-
piled to the payment of the principal
and interest of the government debt,
and they taxed shippers to the extent of
over SAC, 100000, or nearly SS,000,000 a
year, to pay for the initiation of the
capital of these companies and for the
vicious practices that crept into their
management. The sum total of their
mismanagement reaches S247, 100000.
PRESENT STATUS OF THE GOVERNMENT
DEBT.
The present status of the government
debt is also reviewed in detail, and the
asser ion is made that on the basis of
reproducing the aided lines there is
margin of S13, 761 ,6SS over prior liens to
meet the government debt, the present
value of which is 1922, 4S2, 1862. "At
present prices of railroad construction
it is evident that from the properties
themselves the government cannot re-
cover within S10S,000,000 of the present
value of the Indebtedness owing to it
by the bond-aided companies"
WHAT SHOULD THE GOVERNMENT DO?
In commenting on remedies the COM
missioner says: What should the gov
eminent do? A mere money recovery
is the least of benefits it should consider
in deciding upon its course of action.
To redeem these roads from the per-
verted uses to which they have been
applied, in order that the benefcent
public purpose congress had in view in
their creation may be realized, is con-
sideratiOn of infinitely greater imp0r-
tance to the people than the repayment
of given number OF dollars and cents
into the treasury. The government can
we'll afford to lose portion of this in
debtedness if this object can be ac-
complished. Every consideration of |
public policy, the enforcement of law,
the supremacy and dignity of the gov
eminent, demand treatment of this
subject far above and beyond any mere
attempt to collect a public debt.
1.-The government occupies a dual re-
lation to the bond-aided railroads.&c.
sovereign and as creditor. In this as
pect, the question of settlement unfolds |
complications that would not present |
themselves in the ordinary relation
of creditor and debtor A mere creditor |